In a lengthy article in today’s El Caribe, journalist Esteban Delgado reports on the real difficulties the government is experiencing in trying to resolve the chronic problems dogging a central element of Dominican development: the deficient and costly electricity service available to the population. This crisis, which has affected the people and the economy for decades, does not have any easy solutions, and according to Delgado, even if it starts building at least 700 megawatts of electricity production this year, the government will have no solution during this Medina administration, since the Madrid Accords (signed during the Hipolito Mejia government) will be in effect until 2016, when a renegotiation process can begin. And he says that the government lacks the means to make the private generators renegotiate the present terms of those accords.
Perhaps the bombshell in the article is the news of the existence of what is euphemistically called “the order of merit” by which the electricity generators that go on line with generation prices that are higher impose that price on the other generators that are producing at a lower cost. “Yes,” he says, “just as you are reading it.”
The first generators to go on line each day are the ones with the lowest cost (for example, say 9 cents of a dollar per Kw/h); then, as the day goes along and the system need more electricity, other generators, with prices of 12 cents come on line and now the electricity produced by the first series of generators is then set at 12 cents. When generators with 15-cent electricity come on line then the 9-cent and 12-cent generators will receive 15 cents for their power, and so on. So, if the state constructs the two 350 MW generators using natural gas or coal, they will be able to force negotiations in 2016 when they go on line and the Madrid Accords come to an end.
Another issue, of course, is the electricity distributors, the Edes. Despite the fact that the three distributors are collecting close to 90% of the electricity bills issued, all are still losing money: 34.8% Ede-Este, 33% for Ede-Norte and 27.6% Ede-Sur. The reason is that the distributors do not bill as many as 25% of users and this explains the 35% losses that each distributor is reporting. The reporter says that most of this unbilled electricity is consumed “in middle and high-class areas.”